America is getting old. It’s an unstoppable and accelerating truth that will see 10,000 baby boomers turn 65 each and every day for the next 17 years!
The size and impact of this famed generation are nothing new, but now that they’ve begun retiring there’s also a huge opportunity to profit from their unique spending habits, including an unprecedented appetite for big, expensive toys.
“76 million baby boomers control 70% of household wealth,” says Brian Sozzi, the chief equity strategist of Belus Capital Advisors in the attached video. “This is a big, giant, huge investment theme.”
In fact, from higher education to healthcare to housing, the U.S. has been accommodating this egg-through-the-snake generation for decades already. But now that boomers are starting to kick back and enjoy, Sozzi says they’re a force to be reckoned with -- and invested in.Whether its Harley Davidson (HOG) upgrading its fleet and offering things like heated seats on motorcycles, or the 130% increase in the backlog for motor homes at Winnebago (WGO), Sozzi says the business of boomer toys is booming.
And it’s not just Harley and Winnebago. Shares of Polaris (PII) and Thor industries (THO) are also crushing the S&P 500 over the past 5 years.
“They’re all benefitting because credit is actually becoming easier so people are borrowing money to buy a trailer or mobile home to travel across the country,” Sozzi says. “Amen to them, because they’ve been working their butts off for so many years. Now they want to enjoy the fruits of their labor and don’t want to give all their money to kids like me.”
Speaking of kids, that’s another trend Sozzi is onto, as he and many others await the greatest transfer of wealth the world has ever seen. In other words, the coming inheritance boom is going to put a lot of money into much younger hands.
“That’s a sneaky play into all this,” he says. “For my generation, the millennials, we’re supposed to (each) get (an average) $340,000 from our parents.”
What would a 20 or 30-something year old do with such a windfall?
Sozzi says, what else, spend it.
“We’re going to go to Ford (F) and an buy an eco-friendly car. We’re going to go to Apple (AAPL) and buy a bunch of new Apple products,” he cites as predictable millennial binge buys. However, Sozzi also flags more modest retailers like Bed Bath & Beyond (BBBY) as consumption benefactors too.
“My generation is having kids significantly later,” he points out, “but when we do, we’re going to buy lots and lots of products from places like Buy, Buy, Baby” a growing chain which is owned by Bed, Bath, and Beyond.
Unlike their notoriously frugal, depression era parents, Boomers work longer but spend more freely. In fact, studies show that boomers actually spend twice as much money on-line as highly wired 18-22 year olds do. That’s clearly a factor of wealth, but it’s also something that will change over time.
“As a millennial generation, we don’t have a lot of stuff,” Sozzi says of his peer group, that’s often ridiculed for living in their parents basements. “We’re getting paid next to nothing, working at Starbucks, so why not enjoy some of (what) our parents worked so hard for?”
Let the fun begin!